Pensions Bill

moved Amendment No. 77: 77: Before Clause 123, insert the following new Clause— ““Amendment of rules to take pension annuities by the age of 75 (1) Any statutory provision or rule of law requiring a pension to be taken in the form of an annuity by the age of 75 is amended so that the age limit is 85. (2) The Secretary of State must review the age limit no less frequently than every five years and report on the average life expectancy.”” The noble Lord said: My Lords, this is the second bite of the cherry as we debated this matter earlier today. Therefore, I do not propose to cover all the same ground again. As I said, many of the arguments supporting this amendment and Amendment No. 77A, in the name of the noble Lord, Lord Fowler, are about tactics on the best way of relaxing the rules applying to the purchase of annuities, which I think most noble Lords regard as onerous. However, the important thing is to get a worthwhile increase in the age of compulsory annuitisation. If the noble Lord, Lord Fowler, decides to press his amendment on the 80 age limit, I shall be happy to go along with that. It is right to have a compulsory limit for annuitisation, but it was fixed at 75 a generation ago in the mid-1970s. Since that time life expectancy has risen by slightly more than eight years. Therefore, even if one accepts that it was right to fix it at that age at that time, it should be raised to at least 80, if not to 85. My amendment seeks to raise the relevant age and proposes that it should be reviewed every five years so that we do not have to wait another 30 years before it changes. Given the substantial falls in the market in recent months—the noble Lord, Lord McKenzie, said that not everyone’s pension fund is fully invested in equities, but corporate bonds, in which many are also invested, have also taken a tumble—it is highly unlikely that those losses will be regained for several years to come. As regards giving practical help to people in this situation, a minimum of a five year, or preferably a 10 year, increase in the annuity age would enable advisers to offer proper planning and would provide a reasonable period for the long-term market to reassert itself. In this country equities have always produced good returns over long periods, but losses cannot be recouped in a short time. I accept the basic present structure—I think we all agree that the Government are not likely to give way on that—but consider that, given the present crisis, we should move to an age limit which allows for a reasonable period during which pension funds can be rebuilt. Given the large increase in life expectancy over the past 30 years, we should accept the logic of moving, preferably, to a limit of 85, although I would accept one at 80. I beg to move.